Evaluating a Company's Financial Position before Selling Grain on Deferred Price Contracts

Title

Evaluating a Company's Financial Position before Selling Grain on Deferred Price Contracts

Number

FMR 1893

Files

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Publication Date:

10-2017

Status

Current

Description

Grain producers, and the firms to which they sell grain, use a number of contract types to transact, including cash or spot purchase contracts, forward contracts, and deferred price contracts, more broadly termed “credit sale contracts.” Credit sale contracts (CSC) differ from cash and priced forward contracts because they create a unique relationship between the parties: the seller becomes an unsecured creditor of the buyer, creating a potential for counterparty risk to the seller. As with all contracts, it is incumbent on all parties that they be aware of what the contract means and also the risk involved. This publication is intended to serve as a resource for producers who wish to evaluate the financial strength of the creditor company and the potential risk of default for grain sold on a credit sale.

Language

en

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Evaluating a Company's Financial Position before Selling Grain on Deferred Price Contracts

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